How Much Money Does It Take to Be in the Top 1 Percent?
If you’ve ever wondered how much money a top 1% individual has, you’ve probably noticed the growing gap between the super rich and the rest of the world’s population. According to Knight Frank’s 2021 Wealth Report, the wealth threshold required for an individual to be part of the top 1% is $4.4 million. The US is the third most wealthy country, with an average net worth of $30 million. This makes the country’s wealth threshold the third highest globally.
In the United States, the top 1 percent of households have an average net worth of more than $10 million. Eighty-two percent of them live in homes valued at over $600,000, while the median US household makes less than $50K and has a net worth of just $190,000. Almost ninety-six percent of the top 1% reside in the country’s major cities, although some outliers are found in smaller towns.
If you have a net worth of more than $470,000, you should plan for a balanced lifestyle. You don’t want to die with too much money. In fact, you should enjoy your wealth while you’re still living. Professors Kaplan, Guvenen, and Song calculated these levels and adjusted them for inflation since the 2013 report. These numbers may sound low, but they’re a good starting point for identifying how much you can afford to invest in specialized vehicles.
The easiest way to become part of the top one percent is to join an industry that pays well. The more lucrative the industry, the higher the net worth of its members. The key is to stick around for ten years. That way, you’ll be part of the top one percent. You’ll be living the lifestyle you’ve always dreamed of. So, how can you get yourself into the top 1 percent?
The top 1% in the US own a quarter of all household wealth. That equates to an average net worth of $371 million. If they all owned this wealth, it would have been $6 trillion dollars. However, the wealth of the top 400 is just $1.7 trillion, according to the Forbes 400 list. Finance and investment companies make up almost one-fourth of the richest people. Retail and restaurant companies comprise ten percent of the top richest individuals in the US.
While the top 1 percent’s income shares are rising, there’s a vast difference between them and the rest of the population. The average wealth of the top 1 percent is nearly double that of the top five percent. This has left many economists scratching their heads, wondering why they’re so different. Some say the wealth of the top 1% has increased faster than the wealth of the bottom 99 percent. Others believe it’s because of business income.
A better understanding of how you compare to your peers can help you manage your money more effectively. Experts recommend taking cues from your co-workers and competitors when setting net worth goals. This is particularly important for those in emerging markets, where a high net worth threshold is not the only requirement. In other countries, the threshold is lower than that of the top one percent. Some experts suggest adjusting your goal accordingly, however.
While the net worth of the top 1 percent continues to increase, there is a recent deceleration in the growth of wealth. This could be a reflection of increasing uncertainty in the U.S., including increasing stock market volatility and the worry about government debt. However, wealth per adult in the U.S. increased 3% in the 12 months to mid-2019, making it the fastest growing segment of the US population in more recent years.
Net wealth is the total value of an individual’s assets, less any debt. For the top one percent, their net worth is staggering. The average person’s net worth grows as they get older, thanks to their investments and earnings. As they grow older, they are also less likely to accumulate negative net worth. So, net worth for the top 1 percent is even greater than the average American. So, while it may seem like a small percentage, it’s still important to keep in mind that net worth is not just the total value of your assets, but the amount you pay for your debts as well.
Despite these statistics, the vast majority of Americans do not meet the standards of wealth commonly held in the U.S. According to Schwab’s 2021 Modern Wealth Survey, the average U.S. household net worth was only $1.9 million, which indicates that the vast majority of households do not meet the top 1% income threshold. Moreover, perceptions of wealth may be changing as the new generations redefine what is considered “wealthy.”
